Critical Evaluate The Profile And Segment Business Essay

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There were organisational culture issues related to inter- and intra-functional communication, managerial enthusiasm and involvement, and the role of senior leaders. Despite a rigorous segmentation approach, ensuring that all personnel had the required grasp of segmentation principles proved challenging. There were also problems of "fit" with the corporate planning cycle.

The operational problems were primarily traceable to a lack of flexibility in distribution, and sales force resistance to the radically new segments.

Resource barriers were much as expected: time pressures were the most

serious, with data shortfalls and pressures on personnel also causing problems.

Although many of the managers had previously experienced strategic or change management initiatives and segmentation. . The project team therefore, started the project with a working understanding of the potential barriers.

In the following discussion areas in which this knowledge enabled these

barriers to be avoided or overcome and those where it did not are identified, different mechanisms which managers used to overcome the encountered barriers are also considered.

At the start of the project a systematic audit of the required financial, people and

other resources enabled potential implementation barriers to be identified. Steps

were then taken to secure the involvement of senior management, select a suitable

inter-functional project team and to recruit a specialist marketing manager to "own"

the programme. These actions capitalized on existing in-house expertise, ensured

involvement from those likely to be affected by the programme outcomes, and

enabled the early identification of skill gaps which needed to be filled by external

specialists.

Areas which were more problematic were:

Poor level of support and a culture of resistance from managers in some areas of the business.

Problems with the timing of the project.

During the creation of the segments, the project benefited greatly from the

systematic process which had been established. The new marketing manager

undertook the day-to-day running of the project, including reviewing the existing

customer groups, identifying the new segments, and calculating their financial value.

Through methodical project management, he brought together personnel with the

right mix of customer and competitor know-how, extending the workshop programme

accordingly. Meanwhile the external expert had also demonstrated his value, playing

an instrumental role in developing a more appropriate set of targeting criteria.

Regardless of this carefully orchestrated process, some unexpected resource

problems arose. Despite commissioning additional marketing research, shortages of

data threatened the creation of segments and the targeting process. Time constraints

exacerbated the problems, with demands for extra workshops and meetings having

serious repercussions for staff time. The root cause was the difficulty securing

cross-company agreement for the new segments, with each functional area having

its own views about segment attractiveness. As the project timeframe became

progressively eroded, there was less time available for detailed planning of the project

implementation.

During the implementation phase the benefits of the workshop programme became

apparent, with good understanding of the programme and its outputs right across the

organisation. Strong support from the CEO and wider senior leadership team helped

endorse the new segments and ensured they were reflected in the corporate plan.

Nonetheless, some of the encountered barriers were greater than expected, with

time and resource pressures among the most significant. Pressure points arose because the task involved in assigning customers to new segments was more demanding and time consuming than anticipated.

Senior managers struggled to balance their workload because the programme timing clashed with the annual business planning cycle and various regulatory reviews.

The level of resistance to change, a major theme throughout the project,

exacerbated the time pressures. Even managers who had been involved throughout

the programme were anxious about the personal impact of segment changes. New

segments lead to new business priorities for the business and changes to existing

marketing programmes. Although resources were in place to implement these changes,

the level of resistance from managers had not been fully anticipated. The leadership

realized that having a system for mentoring key individuals might have alleviated some

of these difficulties. Instead, the problems were handled by phasing the introduction

of the new segments and by setting up extra workshops to address staff concerns.

This had implications for budgets, time and levels of personnel involvement. The

necessary internal communications and "hand-holding" of concerned staff were

significant demands on the project's team.

Task two: Recommendations

It is recommended to use the implementation rules below to reflect the successful aspects of the implementation programme and to learn from areas in where the company's success was more elusive.

These rules have been divided in to three stages as shown below:

Before segmentation

Approach Adopted:

• Learn from previous corporate mistakes: Review past marketing/strategy initiatives, to identify cultural and operational problems causing failure. Learn the lessons from previous good and bad practice.

• Decide on coverage: Decide to identify segments which cover all operations or to focus on a particular country, product group, sector or brand. Previous strategic initiatives will suggest which is more likely to succeed.

Optimize project timing: Problems with time can be avoided by Careful work scheduling to avoid seasonal business peaks, new product launches, or annual strategic planning or budgeting, and reallocating some of the key managers other responsibilities

Resources:

• Identify and release resources: These include marketing intelligence and marketing research funds, time/commitment from suitable personnel, analytical skills, supporting technology, administrative provision, effective communication media, and senior executives' time. Ensure the time of key personnel is protected.

• Rectify shortfalls in resources and skills: Recognize the true range and depth of skills and resources needed. Identify and rectify deficiencies as soon as possible.

• Select a suitably skilled team: Ensure the team has the necessary skills: including insights into market trends, customers, competitors, organizational capabilities and corporate strategy. Include managers from other functions as needed (eg: sales, logistics, customer service, NPD), checking that all affected by the segmentation are involved/represented. Identify or hire in staff with analytical skills.

• Evaluate marketing intelligence and the MIS: Quickly identify and remedy data shortfalls to allow time to populate the MIS. Existing IT-based information may need to be supplemented with additional customer data. Collect extra competitor intelligence and market trend information as required. Ensure ready access to the required data and those who own them.

Organizational culture/operational:

• Determine leadership, reporting and the senior project champion: Identify a senior and credible project champion to steer the project through procedural hurdles and to ensure co-operation. Establish effective communication channels throughout the organisation. Allocate key tasks to named managers, with clear reporting times.

• Communicate aims and expectations: Encourage commitment by clarifying the potential benefits of the project and be honest about the demands. Manage expectations so that changes in how customers are managed and targeted are anticipated. Clarify and communicate expected timeframes and reporting points.

• Allocate mentors and establish facilitation: Allocate mentors to support the managerial team and monitor individuals, so that problems or skill gaps can be identified and addressed.

During segmentation

Approach Adopted:

• Choose a suitable approach/process: Consider whether there are the skills and experience to handle the project "in-house" or decide to outsource.

Involve personnel with previous segmentation experience, combining in-house capabilities with outsourcing as appropriate. An external facilitator may help reduce political in-fighting and provide best practice guidance. Identify milestones and put measures in place to ensure they are achieved.

• Adopt a balanced set of targeting criteria: Select a balanced mix of targeting attractiveness criteria, so that attractive segments are chosen and the organisation has the capabilities to pursue them. Include short- and longer term considerations and use a mix of internal values and external market facing factors.

• Prioritise segments to target: Ensure the segmentation maximizes the opportunities associated with changing market conditions. The leadership team must be responsive to the opportunity analysis and review the organization's portfolio accordingly. Realign resources to support the attractive target markets, modify performance metrics, and support managers through the resulting changes.

• Determine relevant positioning strategies: Create positioning messages to address new segments. In existing segments use new customer insights to modify positioning. Reconsider positioning messages each time competitive analysis is reviewed, so that the positioning strategy reflects the changing market.

• Specify marketing mix programmes: Operationalise the targeting and positioning with tailored marketing mixes for each segment. Ensure the marketing programmes fit with the findings from the customer, market trend, internal capability and competitor analyses.

Resources

• Apply appropriate resources: Address skill gaps and provide relevant training and mentoring. Seek external support for data collection and analysis, if needed, to free up the time of key managers. Ensure the ongoing availability and commitment of members of the segmentation project team.

• Access and analyze suitable data: Identify and address data gaps, ensuring that the most important are met first. Brief researchers to collect the information and identify skilled analysts to examine the data and derive the market segments.

Organisational culture/operational:

• Encourage lateral thinking: Where major changes to existing customer segments are likely, be aware that managers who are uneasy about change may act to try to maintain the status quo. A senior champion must encourage lateral thinking, so that organizational capabilities and existing practices are critically reviewed. Use cross-functional discussion to smooth the subsequent implementation.

• Debrief colleagues regularly: The project team should regularly review marketing intelligence, consider new segments and discuss targeting options.

Ensure other personnel are debriefed and involved in the project. Use workshops attended by knowledgeable personnel, external analysts, suppliers and industry observers, to collect information on market developments.

• Identify emerging blockers: Recognize that problems will arise in any segmentation project and be ready to handle them. A review programme should be set up so that emerging impediments can promptly be spotted and remedied.

After segmentation

Approach Adopted:

• Produce a detailed implementation plan: Segmentation projects do not end when segments are created. Prepare a detailed plan to ensure that people, budgets, sales and marketing programmes, product development, performance measures and the outlook of senior managers, are re-aligned to reflect the new-look customer segments and priorities. Bring required products quickly to market, make necessary changes to customer service or logistical support, trade or channel relationships must be managed, and the required pricing and promotions actioned.

• Internal marketing of the segmentation strategy: Proactively tackle resistance to changing marketing programmes and budgets. Understand and respond to managers who are concerned about the unfamiliar customer groups. Involving personnel in the segmentation process should have minimized these problems and increased buy-in to the project outcomes. Use senior staff to promote the segmentation and its conclusions through workshops, out-briefings and meetings.

• Track implementation: Regularly review implementation progress through cross-functional meetings, involving senior executives and other personnel. Identify internal blockers to progress, assess competitors' reactions, market acceptance and organizational deficiencies in handling particular market segments.

• Monitor commercial performance: Carefully monitor that expected performance improvements in targeted segments are achieved. Use a balanced set of short and long term-performance measures, reflecting customer closeness and competitiveness, as well as financial gains. Realign marketing mixes if short-term uplifts are not seen. Communicate performance improvements to personnel.

Resources

• Allocate responsibilities, timelines, and resources: Specify clearly who is responsible for what and when. Agree and allocate resources and budgets for the priority segments. Ensure segments deemed a low priority are not allowed to attract resources.

Organizational culture/operational:

• Remedy emerging blockers: Identify internal, resource and operational barriers which might impede aspects of the detailed implementation plan, so that such problems can be proactively managed.

• Promote senior endorsement: Ensure senior champions endorse, promote and control the agreed segmentation. Use strong leadership to calm uncertainty about change and to ensure the best fit between the strategy and marketing programmes.

• Address organizational alignment: Assess existing operating structures and management teams, to reveal areas needing re-orientation. The senior leadership team must proactively deal with the consequences for leadership and reporting. Re-align budgeting and financial reporting procedures accordingly.

• Reward progress: Reward staff for positive contributions to this demanding and resource-hungry process. Words of encouragement from leaders, promotions or a re-structuring of bonus schemes and remuneration, all have a part to play.

• Deal with poor co-operation: Develop a strategy for handling poor co-operation. Use training and mentoring to overcome deficiencies in skills or experience. Minimize the negative impact of staff who are resistant to new ideas, using career management or mentoring, censoring, or by moving unsuitable individuals to other roles.

These rules can be best implemented by the following mechanisms

• Auditing: Two main forms are possible:

A systematic review of available financial, data, personnel and other resources matched to the needs of the Project.

Reflection upon the organization's previous record and experiences of change management programmes and strategy implementation.

• Project teams: Identifying and empowering an appropriate project team ensures clear allocation of project responsibilities. This needs to involve managers from a range of different functions in order to minimize resistance later in the project.

• Outside experts: This additional resource can be usefully deployed to fill internal skill gaps, supplement the project team, and bring a more objective perspective to the programme. 'Designing in' such expertise from the outset is possible where shortages of personnel or of particular skills are identified as problematic.

However, As showed above, the flexibility of this resource means it can also be used to fill emerging gaps as a project progresses.

• Workshops: Setting up a programme of workshops, to which those involved in the project are invited, helps to set aside the necessary people and time resources for conducting the project. As found above, concentrating these workshops into a relatively short period of time can increase the sense of purpose. Off-site events devoted entirely to the segmentation programme can be especially valuable: as a mechanism for kick-starting the process; to earmark time to conduct required analysis; or to negotiate required implementation changes. Using external facilitators can help defuse political sensitivities.

• Briefings: The internal marketing of a segmentation project can be even more challenging than the analysis and design of the segments themselves. Agreeing a consistent format for these briefings ensures that all stakeholders are regularly updated about the project's progress and outcomes. In combination with a workshop programme, these briefings provide a mechanism for breaking down internal barriers as the project progresses. For example, it can be seen from the Audit, the company scheduled extra sessions to manage particular problems around targeting decisions.

• Mentoring: Establishing a system of personal mentoring can be invaluable for projects with wide ranging strategic implications. Feelings of insecurity and anxiety among staff are inevitable during such periods of change. Managing these concerns through one-to-one mentoring can lessen the potential for personal Interests to threaten project outcomes.

Task 3 organization's resource capability and capacity needed

The easiest approach for the Amipharma to break down its resources under the five traditional headings:

MEN

Amipharma always seeks to employ the best mental labor (knowledge workers), so have many of them, but only one of them had past experience with segmentation so Amipharma will need to choose an appropriate project team including from different functions the team should have these skills:

Insights into market trends, customers, competitors, organizational capabilities and corporate strategy needed

And to hire a specialist marketing manager to own the programme. By doing this the company will:

take advantage from the company's experts

Ensure participation from those likely to be affected by the programme outcomes.

enable the early identification of skill gaps, which needed to be filled by external specialists(by training and mentoring the team)

Have to deal with change resistance using the Organizational development approach which" is a systemic process in which applied behavioral science principles and practices are introduced with the goal of increasing individual and organizational performance"(Boddy, 433) , use of personal mentors for those likely to be most affected by the project outcomes was one option that could have been considered

Amipharma has a Lack of cross-functional collaboration: this can be solved by ensuring that improvement initiatives, performance measures, and rewards are designed such that collaboration will be necessary in order to achieve objectives

Amipharma has a slow decision making: this can be solved by ensuring that authority levels are clearly spelled out for typical situations and use an exception basis where a few key people have the authority to act if the decision involves crossing a particular difficult organizational boundary. Specify decision making channels that do not require everyone in their hierarchy to be involved in all decisions, especially those related to improvement opportunities.

Recruiting sales force that have: Knowledge, honesty, professionalism, empathy, persistence, self-assurance, verbal communications skills and enthusiasm

Amipharma is internally focused as the customers is not featured on its structure, so need to locate customers champions to understand customers and their needs and ensure accurate flow of information across the organization as to help in getting a better response to them .

Poor internal communications, which will lead to lack of understanding, so management will need to continuously communicate the organization direction

Ensure the ongoing availability and commitment of members of the segmentation project team

MACHINERY

Computer systems are available, they contain:

A Marketing research system

Marketing intelligence system: Published Data about the marketplace in Microsoft Access format (cim,11)

Decision support system: statistical packages to help in making decisions (cim,12)

Internal records: sales and accounts records of customers and communications made (cim, 12)

What is missing and needed to complete the marketing information system is:

the model bank that stores the marketing models e.g Boston Matrix

Extra competitor intelligence and market trend information.

MONEY

Amipharma's has the financial capability which will help in:

Meeting the different needs.

Acquiring the latest technology in terms of machinery, which will enable them to produce a large range of products with the minimum cost and time (economies of scale) and hence can provide affordable price for the customer but one, has to be careful as this may lead to price war.

Acquiring materials, but can be hindered by the external supply if unexpected demand appears which will affect the response to customers.

marketing intelligence and marketing research funds

collecting extra competitor intelligence and market trend information as required

MINUTES

Time from suitable personnel, and senior executives' time. Ensure the time of key

personnel is protected.

As the project timeframe become increasingly eroded, there is less time available for detailed planning of the project implementation.

Assigning customers to new segments is time consuming. Senior managers will struggle to balance their workload because the programme timing will clashed with the annual business planning cycle and various regulatory reviews.

Resistance to change, throughout the project can aggravate the time pressures.

Problems with the timing of the project can be solved by:

Reallocating some of the key managers' other responsibilities.

Seeking external support for data collection and analysis, if needed, to free up the time of key managers

MATERIALS

Shortages of data can threatened the creation of segments and the targeting process.

Question 4 outline of project plan

Project initiation

This project is aimed at developing a future segmentation, targeting and positioning approach for Amipharma Labs Ltd by using already defined segment groups and creating sub-groups from them. as the segments already available failed to bring homogenous customers segments and does not give indication to the customer needs and buying behavior

scope and objectives

Scope

To re-segment, target and position Amipahrama's customers

Project Boundaries

Limited to the republic of the Sudan (excluding the southern part)

Objectives

The project objectives are to:

1 Identify sub-groupings of customers based on a mix of characteristics, purchasing

Behavior and spend, rather than profitability alone.

2 Generate enthusiasms for the process amongst customer-facing managers.

3 Develop a transparent segmentation, so that staff could instinctively allocate

Customers to a particular segment.

4 Seek market leadership by prioritizing and resourcing the most attractive market

Segments in a differentiated, competitively effective and regulatory compliant

Way.

5 Develop marketing propositions tailored to targeted customer requirements,

through novel sales and marketing programmes.

6 Update insights into customers, competitors, market trends and organizational

Capabilities.

Beginning and end dates

Proposed start date: 1st of March 2011

Proposed end date: 29th of January 2012

Duration of the project: 11 month

Key/core deliverables

Distinguished segments from another (each with needs that are different from one another and can be targeted by distinctive marketing strategy). .(MS 54-55)

Better understanding of customer needs, which will distinguish Amipharma from competitors, and hence better matching of Amipharma product's portfolio to customers' needs.(MS 55)

Allocated resources as on where the returns are high and the competitive advantage is greatest. .(MS 55)

Reachable segments by sales and distribution channels.(MS 54-55)

Methodology adaptation

Run an orientation workshop for sales,marketing,customer sevice managers and senior personnel to establish the necessary actions, resources, personnel, timeframes and reporting structures for the project

Establish a team from functions affected by segmentation.

Hire a marketing manager to manage the project, and make available an external expert for help

Develops micro-segments based on Decision-Making Unit variables from within these

Broader macro-groupings

The segmentation team gathers information from the secondary data already available from Amipharma data base, governmental publications and statistical reports.

These data will include:-

Financial and sales data of Amipharma products.

How the market works

Market size and competing products and services

Customer profiling (identification of different customers' characteristics in the market)

The key product and service requirements(including their benefits and relative importance of these benefits(, and key channel, frequency and method of purchase requirements from the customer's point of view

There will be gaps in information from the internal segmentation team that needs to be filled before committing resources to the identified segments so ,a research brief should be prepared and handed in to an external market research company to reveal the real customer needs who has skills in carrying out qualitative and quantitative research and interpreting the results(ms 209)

From the above data the team should identify new sub-groups from the existing customers.

Sales and marketing personnel should aggregate similar sub-groups to create revised segments

Prepare template containing customer characteristics, buying centre dynamics, product consumption data, Customer needs, the buying decision-making process and influencing factors.

Cross-functional teams made up of senior and line managers, sales, marketing, key account and customer service personnel familiar with each customer grouping should then populate these templates.

Customer types should then be examined by the marketing manager

Using the templates as the basis, sub-divide each existing customer group into more homogenous groups

A separate template was prepared for each of these new sub-groups. Based on these templates, the project team then re-aggregates the customer sub-groups into new market segments by merging those which had similar characteristics, needs and buying behavior.

In parallel to identifying the market segments, the marketing team should update

Its intelligence on competitors and the marketing environment.

Use the Directional Policy Matrix (a portfolio planning tool) to help assess and prioritize the emerging market segments.

Set market attractiveness criteria to be used to assess the relative attractiveness and capability fit of the emerging market segments.

Inform leadership team and other stakeholders about the progress of the segmentation project.

Project limitations

The project only offers guidelines to for segmentation implementation

After the project finishes all the marketing tools should be designed for the new segments

shortages of data threatened the creation of segments and the targeting process

Risk management

Source of risk

Risk identification

Risk mitigation

Organizational risk

Resources

Time limitation

Project dependencies

Funding

Change resistance

Careful and realistic budgeting.

Sufficient allocation of time

Careful scheduling

Regular reviews and audits, reserve funds for contingencies

Engaging decision makers as members of the team, seeking their views and keeping them up to date with progress

Knowledge risk

Poor understanding of segmentation implementation

Provide experts for help and training the team

Project risk

Effective communication

Incompatibility with Amipharma's strategy

Good plans with SMART Objectives

Link new segments with Amipharma's strategy

External

Growing competition

Continuous monitoring of customer satisfaction, and delivery of quality support services

Outline budget

Project implementation

Steps

Appoint the team

Scope and objectives

Task allocation

Risk identification and mitigation strategies

Detailed schedules and feedback mechanism

Feedback reports

Implementation checklists

Segmentation objectives and scope statement

Training materials

Data

Staff training feedback reports

Progress and feedback reports

Key milestones

Material designing and development (first three weeks)

Staff training completion (fifth week) monthly project team meetings

Schedules

see page 281 in project management book

Resource reviews

Personnel requirements

Named Individual(s)

Role

Core team(3 indis)

to carry out all the detailed work required in the segmentation process, report back to the full team for consultation,comment and guidance.(MS 52-53)

Brief researchers

to collect the information and identify skilled analysts to examine the data and derive the market segments

Outsider has experience in market segmentation

to act as a facilitator for the process and to offer an objective and alternative viewpoint to the discussion.(MS 52-53

project champion

steer the project through procedural hurdles and to ensure co-operation (implementation)

mentors

support the

managerial team and monitor individuals, so that problems or skill gaps can be

identified and addressed(implementation)

external support

data collection and analysis

Project Manager( Marketing manager)

has the overall responsibility for the successful planning and execution of a project.

senior staff(sales, customer service and new product managers)

to promote

the segmentation and its conclusions

Project sponsor

Project Support

• Project termination

• Project evaluation

Appendix 1: The Audit

Until the 1989 there were only four operating pharmaceutical factories in the Sudan, competition was low, and medicines export was heavily regulated by the government

So customers were mainly dependant on these few factories and some international companies ,with medicines coming from international companies were not affordable for most Sudanese people because of their high prices due to high taxation, so customers were mainly dependant on the local industry, by mid nineties the government has lifted the taxation from medicines exports(Raw materials and finished products) and this attracted many international and local companies to enter the Sudanese market, now the customers can easily switch between different brands ,and there is little brand loyalty, enticed by lower prices, and the market became competitive and progressively more price sensitive .

So Amipharma decided to implement a segmentation programme to stimulate the hard work of its sales and key account managers, and to help identify attractive customer groups on which resources could be focused. Some of the leadership team was well-known with the profit of market segmentation; two managers have had experience of segmentation from other industries. Regardless of this knowledge, top managers expected to meet resistance from within the company. The Strategy Director decided

to secure the needed internal support by directly involving those senior and line managers who would be most affected by the project. The objective was to ensure strong buy-in throughout all stages of the project. A thorough segmentation process was put in place.

The project objectives were to:

1- Identify sub-groupings of customers based on a mix of characteristics, purchasing

behaviour and spend, rather than profitability alone.

2- Generate enthusiasm for the process amongst customer-facing managers.

3 -Develop a transparent segmentation, so that staff could instinctively allocate

customers to a particular segment.

4 -Seek market leadership by prioritizing and resourcing the most attractive market

segments in a differentiated, competitively effective and regulatory compliant

way.

5 -Develop marketing propositions tailored to targeted customer requirements,

through new sales and marketing programmes.

6 -Update insights into customers, competitors, market trends and organisational

capabilities.

In order to create the required procedures ,resources, personnel, timeframes and reporting structures for the project Amipharma ran an orientation workshop for managers of marketing,sales,customer service and key account managers

A team from different functions was created, and a new marketing manager was employed to

administer the project, outsider experts were readily available to provide support.

.

The segmentation team started with the existing customer groupings, then using already gathered data, and information about:

current and future needs and preferences

attitudes and behavior of the market and changes in the business environment that may affect the size and nature of the market in the future available

Named new sub-groupings within these existing segments.

By involving sales and marketing personnel with experience in market and customers, similar sub-groupings were combined in new ways, to create revised segments

Amipharma leadership picked out this approach because it:

Is not difficult since it starts with existing customer's groupings.

Decreases cost and time.

Directly involves of the Amipharma's personnel in creating the market segments.

A template was made for every customers group containing their buying behavior, needs,usage,chartectrisitcs,the buying decision process and factors influencing them.

A team (sales,marketing,key account and customer service managers) knowledgeable with each customer group dwelt the template.

The marketing manager acted as a facilitator in a four week period workshop to examine Amipharma's existing customer types, it was found that existing customers needs and buying behaviours were too broad to put onto one template, and that unrelated customers had been grouped together due to: industry norms, operational convenience, regulatory compliance, and ignorance of customers' behavior

This template was used as a base to sub-divide the existing customer groups into more homogenous groups

Six to ten sub-groups were identified for each original sub-group

A separate template was set for each of these new sub-groups. Based on these templates, the project team then recombined the customer sub-groups into new market segments by merging those which had similar characteristics, needs and buying behavior.

During identification of the market segments, the marketing team was also updating its intelligence on competitors and the marketing environment

It was decided to use the Directional Policy Matrix (a portfolio planning tool) by the senior managers to help evaluate and prioritize the emerging market segments.

A set of market attractiveness criteria was made in conjunction with the segmentation

project team, to assess the relative attractiveness and capability fit of the emerging market

segments.

Briefings were made regularly to the leadership team and other stakeholders to inform them about the progress of the segmentation project.

The segmentation results

The priority was to produce a segmentation scheme for prescribers, buyers and patients

Twelve different segments were identified, three of which were prioritized for growth following

the preparation of the Directional Policy Matrix, several were to be harvested and

supported with marketing programmes, and several segments were identified as being

unattractive to go after (see below)

Segments for prioritizing or harvesting

Prescribers

Generics prescription

These are price sensitive, delivery is important ,can switch to other brands easily, don't need much promotion

Brand loyal

These are mainly concerned with quality products, cost doesn't matter, availability is important, they do not switch easily, need a lot of promotion

Friendliness to the medical rep

Access is difficult to those who are not friendly, but once they are convinced of the product they stick to it, need promotional materials

Product preferences

These are innovators, not price sensitive, promotion is important

Buyers

Stock seekers

These are mainly wholesalers, Governmental and Non-Governmental Institutions ,they are Price insensitive, speed of delivery is important, need Visits, gifts and posters, reference & address should be available

Profit seekers

These are mainly retail pharmacies, There is neither much concern for quality nor for the whole package of the product offer. So they have brand loyalty.

They are very sensitive to price and price-related factors

Deal can take place through the phone & delivery is important.

Medical reps and salesmen need to explain both product & price offers

Availability seekers

These are mainly hospital pharmacies, Quality and other distinctive features are important. they Also need repeatability & consistency of the offer.

Completely insensitive to price. Promotion through phone, need professional periodicals

Patients

Quality seekers

Brand loyal, price insensitive, package is important

Price sensitive

Not Brand loyal, Availability is important, need cost savings

Problems and solutions encountered before, during and after segmentation

Before segmentation

Because of the senior managements with experience were involved, the cross functional team needs were understood, but the team had some progression barriers, these barriers were:

unstable levels of support across the business for changing the way in which customer

targets were defined

Some kind of change resistance from some managers, as they thought the project might lead to changes in their roles.

Involving the senior leadership team in the project from the start was essential in encouraging personnel that change might being the organisation's best interests.

Pressure from the Corporate to produce the segmentation solution in two month time and to identify the most attractive target markets, these time pressure were mitigated by the newly employed marketing manager and support personnel.

In spite of having industry analysis ,there was little in-depth customer data available ,which made the creation of market segments difficult

The creation of cross-functional teams enabled in-house customer expertise to be captured and recorded. Marketing, customer support, sales and key account managers, supplemented with external industry experts, all played a role in building the necessary customer insights for the template-led segmentation approach.

During segmentation

Time constraints precluded a large-scale quantitative survey of customers' usage,

attitude and purchasing behavior. Instead, external advisors suggested the

"macro-micro" type review of existing customer groupings through which more

homogeneous segments could be created. Managers needed to quickly instigate the

required marketing environment and competitor analyses to ensure that the project

was not delayed due to data shortfalls. Calculations of the financial value of different

customer types were also carried out, so that this vital information was available for

the portfolio analysis and to avoid delays to the project's timeframe.

The recruitment of a marketing manager solely to orchestrate and control this

segmentation project was viewed as essential by senior managers who had witnessed

previous failures of strategic projects within the company. A shortage of suitably

skilled and experienced personnel had already been identified, so this recruitment

in conjunction with the external adviser support and the direct involvement of the

specially created project team helped overcome this resource problem.

Data deficiencies were expected by the team, but the gaps in customer, competitor

and marketing environment intelligence were much greater than had been anticipated.

Mangers realized that these data problems would seriously jeopardize the creation of

segments and consequent decisions on targeting. The solution was to extend the

segmentation workshop programme to include more personnel with customer and

competitor expertise. A carefully targeted programme of marketing research was also

commissioned to allow remaining data gaps to be filled.

Two unexpected problems arose during the segmentation process. The first

was that the creation of actionable segment descriptions (profiles) took longer

and required more workshops and meetings to reach agreement than had been

expected. Several iterations were needed before actionable segment profiles were

developed which enjoyed the support of all business functions. The second was that

the leadership team struggled to look beyond immediate profitability when deciding

which segments to prioritize. This short-term view was in danger of limiting the value

of the portfolio planning and targeting exercise. Following recommendations from

the external expert, a broader set of senior managers was drafted in to discuss this

issue, resulting in a more balanced set of short and long-term segment attractiveness

measures being agreed. All of these problems ate into the project timeframe, leaving

little opportunity to consider the segment roll-out and to anticipate problems which

might subsequently occur.

After the segmentation

Time shortages, limited resources and personnel pressures meant that plans for

implementation were not as comprehensive as required, at the outset of this phase.

Recognising the dangers of the situation, the project team moved quickly to ensure

that a sufficiently detailed implementation plan was put in place. Now the benefits of

careful project planning and the programme of workshops which had been a feature

of the initiative became apparent. Awareness of the project and the resulting segments

was already high, with many personnel having inputted to the process. The visible

support of the senior leadership team for the process and its outputs helped cement

the credibility of the new segments. Inevitably, the choice of priority segments to be

targeted did create considerable discussion, but largely amongst those not privy to

the portfolio planning exercise.

Five significant problems were faced in operationalising the emerging segments:

• Data mining. Millions of customers had to be assigned to segments. This demanded

considerable time, senior level support and the skills of external specialists.

Once populated, the segments' relative financial value could be calculated and

performance standards established to allow progress monitoring.

• Competitor intelligence. Despite routine competitor analysis, only once the

segments existed could the nature of the direct competitive threat within particular

segments be properly assessed. There was a time lag before new research could

be set up to gain these insights.

• Corporate and business planning. Senior managers had to balance the demands

of the segmentation project with those of the annual corporate and business

planning. Creating a project team helped mitigate this problem, but inevitably

conflicts of interest, availability and commitment continued.

• Resistance to change. Senior sales managers were resistant to the project

throughout. Despite being involved in the workshop programme, they argued

about the make-up of the segments and about the agreed profiles. Their

concerns, many of which probably were caused by anxiety about change, could

not be ignored. Further sessions were required to overcome these anxieties and

to ensure that their views were fully incorporated.

• Changing focus in programmes. Given the new-look customer segments, the

revised priorities, and the greater awareness of competitor strategy which resulted

from the project, changes to the organisation's sales and marketing programmes

were inevitable. Bringing about such changes invariably brings problems and is

demanding on resources and budgets. The CEO's explicit commitment to the

new strategy and renewed growth targets in the corporate strategy helped foster

the required change. The project team also decided to build confidence in the

segmentation output by initially focusing on a few of the segments. This enabled

the impact of the new sales and marketing to be demonstrated through improved

customer retention and acquisition rates. Even so, some time elapsed before fully

revised programmes were in place for all newly prioritized market segments.

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